Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales - [2004] NSWCA 200

No judgment structure available for this case.

Reported Decision:
60 NSWLR 558

Court of Appeal

CITATION: Solution 6 Holdings Limited & Ors v Industrial Relations Commission of NSW & Ors [2004] NSWCA 200

HEARING DATE(S): 22/04/04

JUDGMENT DATE:
21 July 2004

JUDGMENT OF: Spigelman CJ at 1; Mason P at 160; Handley JA at 161

DECISION: Order 1 sought by Claimant made. Second and Third Opponents to pay Claimants' costs.

CATCHWORDS: INDUSTRIAL LAW - Industrial Relations Commission - jurisdiction - unfair contract - share sale agreement - not contract "whereby person performs work in any industry" - extension of Commission's jurisdiction over non-industrial contracts - industrial context of legislation - Industrial Relations Act 1996 ss 105, 106, 179 - limitation on Commission power to void or vary unfair contracts under s 106 - ADMINISTRATIVE LAW - privative clause - industrial relations legislation - where only interlocutory procedural decisions so far made by Commission - whether any decision or purported decision made by Commission - meaning of "decision" - no operative step taken - privative clause in s 179 inapplicable - principle of restraint - exercise of discretion to order prohibition where patent defect in Commission jurisdiction

LEGISLATION CITED: Australian Constitution s 75(v)
Contracts Review Act 1980
Fair Trading Act 1987 ss 42, 43, 44, 45, 49, 50, 54, 55, 72
Industrial Arbitration Act 1901 s 32
Industrial Arbitration Act 1912 s 58
Industrial Arbitration Act 1940 ss 84, 88F
Industrial Disputes Act 1908 s 52
Industrial Relations Act 1991 ss 275, 301
Industrial Relations Act 1996 ss 7, 105, 106, 107, 108, 109, 152, 171, 175, 177, 179, 187, 189, 190, 190A, 191, 192, 193, 194, 195, 197, 197A
Industrial Relations Commission Rules 1996 Pt 3 r 18A
Supreme Court Act 1970 ss 48, 69

CASES CITED: AOS Group Australia Pty Ltd (in liq) v Arrogante [2004] NSW IRComm 80
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321
Ballam v Higgins (1986) 17 IR 131
Bank of New South Wales v United Bank Officers' Association and the Court of Industrial Arbitration (1921) 21 SR(NSW) 593
Bartolacci v Permanent Custodians Limited (1992) 44 IR 388
Bartolacci v Permanent Custodians Limited (No 2) (1992) 94 IR 122
Baxter v New South Wales Clickers' Association (1909) 10 CLR 114
Bell v Macquarie Bank Limited (No 4) (1999) 93 IR 191
Belmore Property Pty Ltd v Allen (1950) 80 CLR 191
Black-Clawson International Limited v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591
BNY Australia v James (1992) 40 IR 1
Boral Gas (NSW) Pty Ltd v Magill (1993) 32 NSWLR 501
Brisbane City Council v Attorney General (Qld) (1908) 5 CLR 695
Bromley v Housing Commission of New South Wales (1985) 3 NSWLR 407
Brown v Rezitis (1970) 122 CLR 157
Byrne v Australian Airlines Limited (1995) 185 CLR 410
Cabell v Markham 148 F 2d 737 (1945)
Caltex Oil (Australia) Pty Ltd v Feenan [1980] 1 NSWLR 724
Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169
Carter v NSW Rugby League Limited (1997) 78 IR 368
Cash Converters Pty Ltd v Yildiz (1999) 94 IR 474
Cepus v Industrial Court of New South Wales (1995) 60 IR 113
Chu Kheng Lim v Minister for Immigration (1992) 172 CLR 1
CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384
Clancy v Butchers' Shop Employés Union (1904) 1 CLR 181
Darling Casino Limited v New South Wales Casino Control Authority (1997) 191 CLR 602
Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371
Dickinson v Perrignon [1973] 1 NSWLR 72
Director General of Social Services v Chaney (1980) 47 FLR 80
Dossett v TKJ Nominees Pty Ltd (2004) 78 ALJR 161
Euphoric Pty Ltd v Ryledar Pty Ltd (2002) 117 IR 1
Ex parte The Caterers and Restaurant Keepers' Association (1903) 3 SR (NSW) 19
Ex parte VG Haulage Services Pty Limited; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Gosper v Sawyer (1985) 160 CLR 548
Gray v Rentokil Pty Ltd (unreported, Industrial Court of NSW, Bauer J, 2 April 1992)
Grover v NSW Abalone Divers Co-operative Society Limited (1995) 60 IR 342
Harris v Hammon (1992) 53 IR 235
Hill v William Hill (Park Lane) Ltd [1949] AC 530
Houssein v Under Secretary of Department of Industrial Relations and Technology (NSW) (1988) 148 CLR 88
Howitt v Retec Limited (1992) 45 IR 245
In re Becker and Harry M. Miller Attractions Pty Ltd (No 2) [1972] AR (NSW) 298
K & S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309
Klein v Adler (unreported, Industrial Relations Commission of NSW, Schmidt J, 21 November 1996)
Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443
Maltais v Industrial Commission (NSW) (1986) 14 IR 367
Master Retailers' Association of NSW v Shop Assistants Union of NSW (1905) 2 CLR 94
Matadeen v Pointu [1999] 1 AC 98
Metropolitan Water Sewerage and Drainage Board v Histon [1982] 2 NSWLR 720
Metropolitan Water Sewerage and Drainage Board v Judges of the Industrial Commission of New South Wales [1981] AR 305
Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212
Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIR Comm 458
Mutual Acceptance Co Limited v Federal Commissioner of Taxation (1944) 69 CLR 389
Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 78 ALJR 585
Nolan v Clifford (1904) 1 CLR 429
Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644
Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355
Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132
R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100
R v Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty Ltd (1978) 142 CLR 113
R v Gray; Ex parte Marsh (1985) 157 CLR 351
R v Hickman; Ex parte Fox (1945) 70 CLR 598
R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League Inc (1979) 143 CLR 190
R v PLV (2001) 51 NSWLR 736
R v Ross-Jones; Ex parte Green (1984) 156 CLR 185
R v Young (1999) 46 NSWLR 681
Re Bolton; Ex parte Beane (1987) 162 CLR 514
Re Grimshaw; Ex parte Australian Telephone and Phonogram Officers' Association (1986) 60 ALJR 588
Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620
Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82
Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551
Resarta Pty Ltd v Finemore (2002) 55 NSWLR 320
Rolles v Donald Scott Surgical Pty Ltd (unreported, Industrial Relations Commission of NSW, Fisher P, Cahill VP and Bauer J, 19 February 1998)
Rookes v Barnard [1964] AC 1129
Rothmans Distribution Services Limited v Industrial Court of New South Wales (1994) 53 IR 157
Shaw v Jeffrey (1860) 13 Moo PCC 432; 15 ER 162
State v Zuma (1995) 4 BCLR 401
Stevenson v Barham (1977) 136 CLR 190
Stock v Frank Jones (Tipton) Limited [1978] 1 WLR 231
Stradling v Morgan (1560) 1 Plowden 19
Strathfield Group Limited v Hall (2002) 121 IR 158
Svecova v Industrial Commission of New South Wales (1991) 39 IR 328
Toohey v Gunther (1928) 41 CLR 181
Ultra Tune (Aust) Pty Ltd v Swann (1983) 8 IR 122
Walker v Industrial Court of New South Wales (1994) 53 IR 121
Wilson Parking (NSW) Pty Ltd v Industrial Commission of New South Wales [1979] 1 NSWLR 396
Yirrell v Yirrell (1939) 62 CLR 287

PARTIES :
Solution 6 Holdings Limited (First Claimant)
Solution 6 Pty Ltd (Second Claimant)
Neville Buch (Third Claimant)
Neil Gamble (Fourth Claimant)
Industrial Relations Commission of NSW (First Opponent)
Nicholas Terrence Fish (Second Opponent)
Nisha Nominees Pty Ltd (Third Opponent)

FILE NUMBER(S): CA 40118/04

COUNSEL: F M Douglas QC / B J A Shields (Claimants)
J West QC / S Burchett (Second & Third Opponents)
M Sexton SC / N Sharp (Attorney General)

SOLICITORS: Deacons (Claimants)
Crown Solicitor's Office (First Opponent)
Clayton Utz (Second & Third Opponents)

LOWER COURTJURISDICTION: Industrial Relations Commission of NSW

LOWER COURT FILE NUMBER(S): 1168/02

LOWER COURT
JUDICIAL OFFICER : N/A

- 66 -

CA 40118/04

SPIGELMAN CJ
MASON P
HANDLEY JA
Wednesday 21 July 2004

SOLUTION 6 HOLDINGS LIMITED & ORS v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES & ORS

In early 2000, Solution 6 Holdings Limited (the First Claimant) purchased the entire shareholding in a company known as FishTech and Partners Pty Ltd held by the Third Opponent, which was the family trust of Mr Nicholas Fish, the Second Opponent. Pursuant to a Share Sale Agreement, $18.5 million of the $19 million purchase price was paid in Solution 6 shares, with an ascribed value of $9.75 per share. Despite Mr Fish’s efforts to insert one, no floor price mechanism for the Solution 6 shares was included in the Share Sale Agreement. As a condition precedent to the completion of the sale, Mr Fish was required to enter into an employment contract with Solution 6. The price of Solution 6 shares fell significantly between exchange of contract and completion, and has not since approached $9.75. In 2002, Mr Fish’s employment was terminated by Solution 6.

Mr Fish initiated proceedings in the Industrial Relations Commission seeking relief under s106 of the Industrial Relations Act 1996 in relation to both the Share Sale Agreement and his employment contract, as well as various other aspects of his employment arrangements. The Commission has not commenced to hear the matter, nor have the Claimants made any objection in the Commission to its exercise of jurisdiction. The Claimants sought an order in the nature of prohibition to prevent the Commission from dealing with that part of Mr Fish’s summons for relief relating to the Share Sale Agreement.

HELD
(per Spigelman CJ, Mason P and Handley JA agreeing)

A.

The critical jurisdictional fact in relation to s106 is the identification of a contract, as defined in s105, whereby a person performs work in any industry. A contract will satisfy this test if it leads directly to a person working in any industry. The industrial context of the Industrial Relations Act 1996 is of assistance in determining whether the connection between a contract and the performance of work is sufficiently direct, but there is no separate “industrial colour or flavour” element required to establish jurisdiction. [26]-[30], [34]

Stevenson v Barham (1977) 136 CLR 190 applied; Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212, Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIR Comm 458 discussed; Ex parte VG Haulage Services Pty Limited; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81, Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644, Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 referred to.

B.

Where a contract directly envisages performance of work and has a recognisable impact on the conditions of that work the Court will readily conclude that the requisite direct connection to the performance of work exists. [57], [58]

Ex parte VG Haulage Services Pty Limited; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 applied, Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212 referred to.

C.

The words “related condition” and “collateral arrangement” in s105 are intended to bear their natural and ordinary meanings, rather than any technical meaning. In particular, the word “collateral” should not be confined to the meaning given to that term in the law of contracts. [41]

D.

The Share Sale Agreement is not a contract whereby a person performs work in any industry within s106. It is a contract for the purchase and sale of a business and nothing more. The relationship between the Agreement and the performance of such work is indirect or consequential. [53], [59]-[64], [178]

Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644, Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 applied.

E.

A purposive approach to statutory interpretation requires s106 to be read and understood in an industrial context and within a legislative scheme relating to the performance of work. The Commission’s power to declare void or vary a contract or arrangement, or related condition or collateral arrangement, under s106(1) extends only to such aspects of it as closely relate to the performance of work in an industry. [73], [83], [93]-[95]

(per Mason P and Handley JA)

The words “whereby a person performs work in any industry” qualify each limb of the statutory definition of contract and not merely its contract and arrangement limbs. [160], [166]

CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384 applied; K & S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309 discussed; Gosper v Sawyer (1985) 160 CLR 548 referred to.

In re Becker and Harry M. Miller Attractions Pty Ltd (No 2) [1972] AR (NSW) 298, Gray v Rentokil Pty Ltd (unreported, Industrial Court of NSW, Bauer J, 2 April 1992), BNY Australia v James (1992) 40 IR 1, Bartolacci v Permanent Custodians Limited (1992) 44 IR 388, Bartolacci v Permanent Custodians Limited (No 2) (1992) 94 IR 122, Howitt v Retec Limited (1992) 45 IR 245, Harris v Hammon (1992) 53 IR 235, Grover v NSW Abalone Divers Co-operative Society Limited (1995) 60 IR 342, Klein v Adler (unreported, Industrial Relations Commission of NSW, Schmidt J, 21 November 1996), Carter v NSW Rugby League Limited (1997) 78 IR 368, Bell v Macquarie Bank Limited (No 4) (1999) 93 IR 191, Cash Converters Pty Ltd v Yildiz (1999) 94 IR 474, Euphoric Pty Ltd v Ryledar Pty Ltd (2002) 117 IR 1, Strathfield Group Limited v Hall (2002) 121 IR 158 not followed.

F.

The formula for computation of the purchase price in the Share Sale Agreement does not relate closely to the performance of work and hence the Commission has no power to void or vary the provisions in the Agreement relating to that formula. [94]-[95]

G.

Whether or not an interlocutory step constitutes a “decision” for the purposes of s179 will depend on the circumstances of each case and the nature of the order made. An operative step in the proceedings is the minimum requirement for a “decision” protected by s179. Nothing in the nature of an operative step has been taken in the Commission proceedings and no “decision” exists for the purposes of s179. [113], [122], [123], [125]

R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100, Belmore Property Pty Ltd v Allen (1950) 80 CLR 191 applied; Director General of Social Services v Chaney (1980) 47 FLR 80, Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 discussed; Metropolitan Water Sewerage and Drainage Board v Histon [1982] 2 NSWLR 720, Bromley v Housing Commission of New South Wales (1985) 3 NSWLR 407, Boral Gas (NSW) Pty Ltd v Magill (1993) 32 NSWLR 501, Resarta Pty Ltd v Finemore (2002) 55 NSWLR 320 at 340 referred to.

H.

An order in the nature of prohibition is discretionary in all cases in New South Wales, but should issue “almost as of right”. [135]

R v Ross-Jones; Ex parte Green (1984) 156 CLR 185, Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82 discussed.

I.

The principle of restraint previously exercised by the Court of Appeal in respect of the Industrial Commission can no longer operate in the same way as it did before s179 was enacted, at least with respect to matters that are not of an industrial character. The Court of Appeal must be slow to intervene before the Commission has had an opportunity to determine its own jurisdiction, but intervention will be appropriate where restraint would render the Court’s supervisory jurisdiction irrelevant. [138], [144], [145], [182], [183]

R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 applied; R v Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty Ltd (1978) 142 CLR 113, R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League Inc (1979) 143 CLR 190 referred to; Metropolitan Water Sewerage and Drainage Board v Judges of the Industrial Commission of New South Wales [1981] AR 305, Ultra Tune (Aust) Pty Ltd v Swann (1983) 8 IR 122, Maltais v Industrial Commission (NSW) (1986) 14 IR 367, Ballam v Higgins (1986) 17 IR 131 distinguished.

J.

The defect in the Commission’s jurisdiction is patent, plain or clear. Commercial convenience would be advanced by the exercise of the Court of Appeal’s discretion to order relief, and there is no reason why the Court should refrain from exercising its jurisdiction. An order to the effect of prohibition should issue. [150], [154], [158]

R v Ross-Jones; Ex parte Green (1984) 156 CLR 185, R v Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty Ltd (1978) 142 CLR 113, R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League Inc (1979) 143 CLR 190, Boral Gas (NSW) Pty Ltd v Magill (1993) 32 NSWLR 501, R v Gray; Ex parte Marsh (1985) 157 CLR 351 applied.

ORDERS

CA 40118/04

SPIGELMAN CJ
MASON P
HANDLEY JA

Wednesday 24 July 2004

SOLUTION 6 HOLDINGS LIMITED & ORS v INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES & ORS

Judgment

1 SPIGELMAN CJ: The Claimants seek an order in the nature of prohibition to restrain the Industrial Relations Commission (“the Commission”) from dealing with part of a Summons for Relief under s106 of the Industrial Relations Act 1996 (“the Act”). The Second and Third Opponents (“Mr Fish”) and (“Nisha Nominees”) are the Applicants in the proceedings in the Commission. The Claimants are Respondents.

2 The proceedings were commenced in the Commission on 1 March 2002. A Reply to the Summons, a Response to the Reply and an Amended Summons have subsequently been filed.

3 Directions have been made in the course of the proceedings. Discovery has been given. The Second and Third Opponents have filed their affidavit evidence. The Claimants have not yet filed any evidence.

4 The Claimants have not made any objection in the Commission to its jurisdiction. The Commission has not commenced to hear the matter, nor has it made any decision as to its jurisdiction. Such decisions as it has made have been of a procedural nature.

5 The allegations of fact made in the Amended Summons in the Industrial Relations Commission are common ground for purposes of the proceedings in this Court. A number of matters raised in the Commission are not the subject of relief sought in this Court. The proceedings in this Court concentrate on a contract, called the Share Sale Agreement, pursuant to which the First Claimant (“Solution 6 Holdings”) purchased the entire shareholding in a company known as FishTech and Partners Pty Ltd held by the Third Opponent, “Nisha Nominees”, the family trust of the Second Opponent, Mr Fish. The terms of the Share Sale Agreement are central to the issues in dispute in this Court and I will set them out in some detail below.

6 The evidence in these proceedings consists of documents filed in the Commission proceedings. The Claimants tendered the Share Sale Agreement, the original and amended Employment Agreement between Mr Fish and the Second Claimant (“Solution 6”), a wholly owned subsidiary of Solution 6 Holdings and which is the operating company of the software development business; the Amended Summons and the Reply and Response filed in the Commission. The Opponents tendered certain parts of the affidavit evidence filed on their behalf in the Commission. There was no relevant dispute as to facts.

Background Facts

7 The proceedings in the Commission seek relief in relation to the employment contract, superannuation entitlements and an employee bonus scheme. The proceedings in this Court are not concerned with these aspects of the case in the Commission. The Claimants seek orders only insofar as the Opponents seek relief in relation to the Share Sale Agreement.

8 In the second half of 1999 and the first half of 2000 various proposals were discussed between Solution 6 Holdings and the Opponents with respect to the acquisition of an interest by Solution 6 Holdings in the FishTech business. By January 2000 the proposal was to purchase the entire shareholding for a purchase price of $19 million of which $18.5 million would be paid to Nisha Nominees by issuing slightly under two million shares in the First Respondent (“the purchase shares”) at the then market value of $9.75. The remaining $500,000 of the purchase price would be paid following the completion of an audit within three months of the completion date of the proposed agreement. The Share Sale Agreement would be conditional upon Mr Fish agreeing to be employed by Solution 6 for a period of three years.

9 At the time, according to the affidavit of Mr Fish sworn in the Commission proceedings, and tendered by the Opponents in this Court, the then Chief Executive Officer of the Claimants said:

The deal is contingent on you accepting a role with Solution 6. You will be responsible for delivering the strategy, beginning in Australia. I will deliver strategy in the US, and work with capital markets so they understand our plan

…

One of the key elements of the deal is you agreeing to the terms of an executive employment contract. It is important to Solution 6 that you are signed on to Solution 6 for a minimum period of three years

Over the next three years I will structure a lucrative options package for you to ensure you remain incented and focused on the performance of Solution 6. You can see how such an options scheme has made me a very wealthy person

10 Mr Fish says that he said:

You are sending me an executive services agreement, and the deal will not go ahead unless I agree to be employed by Solution 6 for a minimum of three years

11 According to the allegations in the Amended Summons in the Commission, Mr Fish expressed concern that the value of the purchase price would be diminished if the market price of the purchase shares fell below the ascribed value of $9.75. He sought to have a clause included in the Share Sale Agreement to preserve the value to him of the purchase price. A specific proposal to include a “floor value” in the final agreement was put forward.

12 The Amended Summons refers to a number of representations made by Solution 6 Holdings, all tending to bolster its future prospects and the value of its own shares. The detail is not significant for present purposes. For the reasons so advanced, it was suggested that there was no need to include a floor price in the mechanism in the agreement. It was not included.

13 On or about 2 March 2000, Solution 6 and Nisha Nominees exchanged the Share Sale Agreement which provided for the total purchase price of $19 million for an ascribed value of $9.75 per share. At this time the shares in Solution 6 Holdings, according to the Summons, were trading at approximately $13.30. By May 2000, when the Share Sale Agreement was completed, the Amended Summons states that Solution 6 Holdings shares were trading at approximately $3.00.

14 In the Summary of Matters of Fact and Law set out in the Amended Summons the Opponents assert in par [21]:

“The Share Sale Agreement was an arrangement under which work was performed or an arrangement collateral to one under which work was performed because it required FishTech and the Second Applicant to procure the employment of specified employees, including the First Applicant, to provide services to the Second Respondent. Hence, the employment of the First Applicant was a condition precedent to the Share Sale Agreement.”

15 The Opponents assert in par [94]:

“… the Share Sale Agreement is either or both:

(a) an arrangement under which the Applicant performed and performs work for the Second Respondent in an industry; or

(b) an arrangement collateral to an arrangement or contract pursuant to which the First Applicant performs, and performed, work in an industry.”

16 The Amended Summons asserts, and it is common ground for present purposes, that the First Claimant, Solution 6 Holdings, has not paid the $500,000 balance of the purchase price in what is described as a “flagrant breach of the terms of the Share Sale Agreement”.

17 As mentioned above, cl 2.1(a) of the Share Sale Agreement establishes a condition precedent for completion, to the effect that Mr Fish will enter an employment contract with the Purchaser. An Employment Agreement between Mr Fish and Solution 6, the Second Claimant, was executed. It contains terms and conditions that are usual in a contract of employment for a senior executive. Nothing turns on the precise terms of the Employment Agreement, nor on the fact that it was not entered with the parent company, Solution 6 Holdings, as envisaged by cl 2.1(a), but with its subsidiary Solution 6.

18 The relief sought in the proceedings before the Commission, with respect to the Share Sale Agreement, is:

(a) an arrangement under which Mr Fish performed work for Solution 6 in an industry, or

(b) an arrangement collateral to an arrangement or contract pursuant to which Mr Fish performed work in an industry.

(ii) A declaration that the Agreement operated in an unfair, harsh and unconscionable manner because:

(a) it “permitted” Solution 6 Holdings to breach cl 4 by failing to provide the outstanding $500,000 of the total purchase price.

(b) officers of the Solution 6 company “were permitted to represent” that a floor price mechanism was unnecessary on the basis of certain facts with the consequence that the Agreement did not include such a mechanism with specified adverse financial consequences for Mr Fish and Nisha Nominees.

(c) the total value received for the sale of FishTech was significantly lower than its value and was not sufficient for fair consideration.

19 What the Opponents seek to achieve with respect to the Share Sale Agreement is the inclusion of an effective “floor price” of $9.75 for each of the purchase shares. This was a result which the Opponents sought, but did not achieve, at the time the Share Sale Agreement was negotiated. Alternatively, they seek the difference between the value actually received by Nisha for the sale of FishTech and an offer of US$12 million or, alternatively, a valuation of US$8 million; each of which had been made reasonably contemporaneously with the arrangement eventually entered with Solution 6 Holdings.

20 As noted above, the relief encompasses an assertion of unfairness on the basis that the Share Sale Agreement “permitted” Solution 6 Holdings to breach the Agreement by failing to pay the outstanding $500,000 of the purchase price. This claim is based on the decision of the Commission in Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 which holds that a contract can be found to be unfair because of conduct which is in breach of contract. I left open the validity of this proposition in Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212 at [93]. I note that the Claimants made no separate submission with respect to this claim and it is unnecessary to consider the matter.

The Share Sale Agreement

21 In the Share Sale Agreement, Nisha Nominees is the “Seller”, Solution 6 Holdings is the “Buyer”, FishTech & Partners is the “Company” and Mr Fish is the “Guarantor”.

22 The following clauses of the Agreement are of particular relevance to the issues that arise in the present proceedings:

“2 Conditions for Completion

2.1 Conditions

(a) Nicholas Fish: Completion will not proceed unless the Buyer is satisfied that before or simultaneously with Completion, Nick Fish has been released from employment with the Company and has entered into an employment contract with the Buyer, on terms acceptable to the Buyer (including at no cost to the Company);

…

(c) Other conditions: Completion will not proceed unless the Buyer, acting reasonably and in good faith, is satisfied as at the Completion Date that:

(1) Key Employees: Boris Dogin and at least three of the five Employees listed in schedule 13 have not resigned or indicated an intention not to continue employment with the Company after Completion.

…

2.2(a) The Seller must use its best endeavours to satisfy the conditions for Completion set out in clause 2.1.

(b) The Seller must use its best endeavours to ensure that the Company does all things necessary to ensure that the conditions set out in clause 2.1 are satisfied.

…

2.4(a) The conditions for Completion in clause 2.1, other than clause 2.1(b) may be waived only by the Buyer.

…

4. Purchase Price

4.1 Amount

The price payable for the Shares is $19 million subject to adjustment under clause 4.3 and holdback under clause 4.6, and which is payable under clauses 4.2 and 4.4.

4.2 Payment of Purchase price

(a) On the Completion Date, the Buyer must pay $18.5 million to the Seller on account of the Purchase Price.

(b) On the Completion Date, the Seller must subscribe for, and the Buyer must issue 1,897,436 shares in the capital of the Buyer at the issue price of $9.75 per share and the Seller must pay the subscription moneys to the Buyer.

(c) The amounts payable by the Buyer and the Seller under clauses 4.2(a) and (b) shall be set off against one another.

4.3 Adjustment

(a) An audit of the Company’s accounts at Completion (Completion Accounts) will be carried out in accordance with clause 4.5 to determine whether any adjustments to the Purchase Price will be made under clause 4.3(b).

(b) The Purchase Price will be reduced on a dollar for dollar basis, to the extent that the aggregate amount of net assets of the Company as disclosed in the Accounts is less than the aggregate amount of net assets of the Company as disclosed in the audited Completion Accounts.

4.4 Balance of purchase price

(a) Subject to clauses 4.5 and 4.6, on the Business Day first occurring 3 months after the Completion Date (Relevant Date), the Buyer must pay the remainder of the Purchase Price (being $500,000 less any adjustments under clause 4.3 and 4.6) to the Seller.

(b) Subject to clause 4.5 and 4.6, on the Relevant Date, the Seller must subscribe for, and the Buyer must issue, that number of Shares in the capital of the Buyer as equals the amount payable under clause 4.4(a) divided by $9.75 (being the subscription price per share), and the Seller must pay the subscription moneys to the Buyer.

(c) The amounts payable by the Buyer and the Seller under clauses 4.4(a) and (b) shall be set off against one another.

(d) In the event the adjustment to the Purchase Price under clause 4.3(b) is in excess of $500,000, the amount in excess must be paid by the Seller to the Buyer within 7 days of the Buyer notifying the Seller in writing of the amount in excess of $500,000 owed to the Buyer. Payment may be in cash or in Sol 6 Shares (at $9.75 per share).

4.5 Audit of Completion Accounts

(a) The audit must be carried out in accordance with the Australian Accounting Standards (and the parties agree the particular standards listed in the Disclosure Letter under the heading DD1 and DD2 shall apply) notwithstanding the matters disclosed in the Disclosure Letter.

(b) The Buyer must prepare and procure the audit of the Completion Accounts by the Buyer’s Auditor and procure the calculation of the adjustments under clause 4.3 as soon as practicable, and in any event within 3 months after Completion, by providing to the Seller, in a reasonable level of detail, copies of the Completion Audit, audit certificate, the calculation of the adjustments sought and the accounting basis for seeking those adjustments.

(c) If any adjustment sought by the Buyer has not been accepted by the Seller and is not waived by the Buyer within 14 days of the Buyer giving notice of the adjustments sought pursuant to clause 4.5(b):

(1) the dispute regarding the remaining adjustment or adjustments sought shall be referred as soon as practicable to the President of the Institute of Chartered Accountants in Australia or his nominee for determination of the appropriate accounting practice. Any party may make the referral under this clause;

(2) the Buyer is entitled to retain an amount equal to the total unresolved adjustments from that part of the Remaining Price, pending resolution of the dispute;

(d) A determination under clause 4.5(c) is final and binding on the parties.

(e) The parties must bear equally the costs of the referral and determination under clause 4.5(c).

(f) In making a determination under clause 4.5(c), the President of the Institute of Chartered Accountants in Australia or his nominee act as an expert, not as an arbitrator.

4.6 Warranty claim holdback

(a) If, on the Relevant Date, the Buyer has made a claim against the Seller under this agreement (including for breach of Warranty) and that claim has not been resolved, the Buyer may withhold from any amount payable under clause 4.4(a) a reasonable estimate of the amount of that claim.

(b) Any amount withheld by the Buyer under clause 4.4(a), less any amount due to the Buyer when the relevant claim is finally determined or agreed upon, must be paid to the Seller (and shares in the Buyer issued in accordance with clause 4.4(b)) once the claim the subject of the withholding has been agreed or finally determined.

(c) The withholding of any money under this clause 4.6 is without prejudice to any other rights the Buyer may have against the Seller under this Agreement.

…

8. Competition

8.1 Undertakings

…

(b) Subject to clause 8.1(c), the Seller and Guarantor [Nick Fish] must not do, and must ensure that none of their Related Corporations do, any of the following without first obtaining the written consent of the Buyer:

(1) directly or indirectly carry on (whether alone or in partnership or joint venture with anyone else) or otherwise be concerned with or interested in (whether as trustee, principal, agent, shareholder, unit holder or in any other capacity) any business similar to or competitive with the Business:

(A) in Australia for 2 years after Completion;

(B) in Australia for 1 year after Completion;

(C) in Sydney, Melbourne and Brisbane for 2 years after Completion;

(D) in Sydney, Melbourne and Brisbane for 1 year after Completion;

(2) solicit or persuade any person or corporation which is a customer or client of the Buyer or the Company, or who was in the 12 month period before the Completion Date a customer or client of or in respect of the Business, to cease doing business with the Buyer or the Company or reduce the amount of business which the customer or the client would normally do in respect of the Business:

(A) for 2 years after Completion;

(B) for 1 year after Completion;

(3) accept from a customer or client referred to in clause 8.1(b)(2) any business of the kind ordinarily forming part of the Business:

(A) for 2 years after Completion;

(B) for 1 year after Completion;

(4) at any time use or disclose to any third party any trade secrets, product information or confidential information of the Business which is not generally known or available in the market place or which but for a breach of this clause 8.1(b)(4) would not be generally known or available in the market place; or

(5) at any time induce or attempt to induce any person who is at the time of Completion or who later becomes an employee of the Buyer or any Related Corporation of the Buyer in the Business to terminate his or her employment with the Buyer or any Related Corporation of the Buyer.

(c) If the Guarantor’s employment with the Buyer’s Group is terminated by a member of the Buyer’s Group, the restraint referred to in clause 8.1(b)(1), (2) and (3) will cease to apply from that date of termination, unless termination results from any of the following events:

(1) conduct by the Guarantor that constitutes:

(A) serious misconduct; or

(B) poor performance, or

(2) termination by the Guarantor.

In which case the restraint referred to in clause 8.1(b)(1), (2) and (3) will continue to apply despite termination of the Guarantor’s employment.

…

14.1 Employees

On and from the date of this agreement the Seller and Guarantor must use their best endeavours to ensure that all Employees and contractors/consultants on contract with the Company remain in the employ of or contracted to the Company.

…

15.9 Further assurances

Each party must do all things necessary to give full effect to this agreement and the transactions contemplated by this agreement.

…

15.11 Entire agreement

(a) This agreement embodies the entire agreement between the parties with respect to the subject matter of this agreement and supersedes any prior negotiation, arrangement, understanding or agreement with respect to the subject matter or any term of this agreement.

(b) Any statement, representation, term, warranty, condition, promise or undertaking made, given or agreed to in any prior negotiation, arrangement or agreement has no effect except to the extent expressly set out or incorporated by reference in this agreement.”

23 I note that Mr Fish is not one of the Employees listed in Schedule 13. I also note that cl 14.1 has no application to Mr Fish. That clause requires employees to remain in the employ of the Company. By cl 2.1(a) Mr Fish is to cease employment with the Company and become employed by the Buyer. The Share Sale Agreement annexes a list of employees including Mr Fish as Managing Director. This is said to be a list for purposes of Schedules 5 and 6, respectively encompassing service contracts and employees. The schedule is in a form and contains information which indicates that it was originally prepared for another purpose. The inclusion of Mr Fish in this list cannot contradict the clear intent of cl 2.1(a) that he cease to be employed by the Company.

The Statutory Power

24 The jurisdiction invoked by the Opponents in the Commission is that conferred by s106 of the Act which provides:

“106(1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract.

(2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason.

(3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time.

(4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force.

(5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case.

(6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss.”

25 Section 105 defines the word “contract” in the following way:

“Contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument.”

26 The critical jurisdictional fact is the identification of a contract, etc. “whereby a person performs work in any industry” in the sense determined by the High Court in Stevenson v Barham (1977) 136 CLR 190 at 200, 201 and 202. I refer to, but do not repeat, my discussion of this test in Mitchforce Pty Ltd v Industrial Relations Commission of NSW at [4]-[14].

27 The critical passage in the joint judgment in Stevenson v Barham is at 201:

“… if the contract is one which leads directly to a person working in any industry it has the requisite industrial character – it is a contract ‘whereby a person performs work in any industry’. This is the relevant jurisdictional fact which needs to be established.”

28 The issue that arises in the present case is what kind of relationship can be said to lead “directly” to a person working in an industry.

29 The industrial context of the legislation is of assistance in determining whether or not the connection between the contract, as defined, and the performance of work in a particular case can be characterised as sufficiently “direct”. I made this observation in Mitchforce at [15]. My judgment was interpreted by the Full Bench of the Industrial Commission as suggesting, or reinstating, an “industrial colour or flavour” test as an element required to establish jurisdiction and, in this regard, as constituting a gloss on the test from Stevenson v Barham quoted above. (See Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIR Comm 458 esp at [61], [73]-[76], [104].) Mr J West QC submitted that their Honours erred in so characterising my reasoning. Mr West is correct.

30 I did not intend by anything I said in Mitchforce to qualify the Stevenson v Barham test. It is the fact that the contract is one which leads directly to a person working in an industry that gives it what, in the passage quoted above, Mason and Jacobs JJ described as “the requisite industrial character”.

31 As I pointed out in Mitchforce at [6] there is sometimes difficulty in determining when a contract may be said to lead “directly” to the performance of work and, referring to the joint judgment in Stevenson v Barham, I said “the emphasis their Honours gave to the scope and purpose of the legislative scheme” is “of some assistance” in determining this issue. I referred to p 200 of the joint judgment where their Honours set out a passage from a judgment in which their Honours had joined a few years before, when they were both members of this Court, in Ex parte VG Haulage Services Pty Limited; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 at 88, where Jacobs JA, with whom Mason JA agreed, said:

“… the transaction must directly lead to work in the industry – that is what gives the industrial colour or flavour – “

32 After quoting the full extract in which this passage appears in their joint judgment in Stevenson v Barham, their Honours explained it (at 200) in the following way:

directly

33 Their Honours’ references to “industrial colour and flavour” in both VG Haulage and Stevenson v Barham, as with the reference to “the requisite industrial character” in their authoritative formulation of the test, manifests the significance to be attached to the scope and purpose of the legislative scheme when construing words in an Act, relevantly the word “whereby”.

34 There is an industrial context for s106 and its predecessor provisions. I do not doubt that so long as a transaction can be said to lead directly to work in a industry, the Commission has jurisdiction. Nevertheless, in my opinion, the industrial context is of assistance when determining whether or not the relationship between a transaction and work in a industry can be said to be “direct”. I intended to say no more in Mitchforce. However, as I mentioned in that case at [15], the word to be construed is “whereby”.

35 The present case raises issues similar to those considered by this Court in Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644 and Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443. I have set out relevant extracts from the judgments in those cases in Mitchforce at [17]-[22] and it is unnecessary to repeat them. Two paraphrases of the word “directly” and, therefore, of the word “whereby” were offered in those cases. Mahoney JA posed the question in terms of “whether the purpose of the transaction was that relevant work be performed” (Production Spray Painting at 649G and Majik Markets at 459A). Priestley and Handley JJA posed the question in terms of whether: “The impugned contract, etc … must directly, that is under or pursuant to its terms, provide for the performance of work in an industry”. Their Honours contrasted such a situation with a contract which leads to the performance of the work in an industry “only indirectly or in a remote or consequential manner” (Production Spray Painting at 657D). Their Honours answered the question, on the facts of the particular case, as to whether or not the work was “required” by the agreement (Production Spray Painting at 657E-F). In Majik Markets Handley JA, with whom Kirby P agreed, also posed the question in terms of whether the relevant agreement “requires” a person to perform work (at 465A).

Issues Arising on s106

36 As noted above the Amended Summons asserts that the Share Sale Agreement was itself an arrangement under which work was performed “because it required FishTech [and Nisha Nominees] to procure the employment of specified employees, [including Mr Fish] to provide services to” Solution 6 Holdings. In submissions in this Court, the Opponents went beyond the particular words of this pleading to rely on a range of provisions in the Share Sale Agreement as the foundation for a submission that the Agreement satisfied the statutory test in s106(1). This Court would not prohibit proceedings where a simple amendment concerning the legal effect of facts which are common ground would cure any defect. Accordingly, it is appropriate to proceed on the broader basis argued in this Court.

37 Mr J West QC, in his submissions, relied on the following aspects of the Share Sale Agreement:

(i) Mr Fish was a party to the Agreement. He was described as the “Guarantor” but his obligations under the Agreement go beyond that designation.

· Mr Fish entering into an employment contract with Solution 6 Holdings (cl 2.1(a)).

· Key employees not having resigned or have expressed an intention to do so (cl 2.1(c)).

· Nisha Nominees using its best endeavours to ensure that the conditions in cl 2.1(a) and (c) are satisfied (cl 2.2).

(iii) Mr Fish and Nisha Nominees were obliged to use their best endeavours to ensure that all contractors and employees remained in the employ of or contracted to the Company (cl 14.1). It was submitted that this clause extended to Mr Fish, but for the reasons I have set out in par [23] above, on the proper construction of the Agreement, that is not so.

(iv) Nisha Nominees and Mr Fish were subject to restraint of trade and disclosure provisions, in cll 8.1, 8.2, 8.4 and 8.6.

(v) Mr Fish provided a continuing guarantee and indemnity in respect of the performance of the obligations of Nisha Nominees (cl 13).

38 Mr F Douglas QC, who appeared for the Claimants, submitted that the Share Sale Agreement was not one which directly led to the performance of work. It did so only indirectly or in a remote or consequential manner. At its highest, he submitted, the Share Sale Agreement could only be seen as an agreement that indirectly led to the performance of work. The effect of cl 2.1(a), which provided that an employment agreement was a condition precedent to completion, did not, he submitted, have the requisite direct quality. He noted that it was inserted for the benefit of Solution 6 Holdings as “Buyer”, as only the Buyer could waive it. (See cl 2.4(a).)

39 Mr Douglas QC submitted that, although the Share Sale Agreement contemplated the performance of work by Mr Fish and by others, that was not its purpose. The purpose was for Solution 6 to acquire the FishTech business. He relied on my observation in Mitchforce at [49] that mere ‘contemplation’ that work will be done is not enough.

40 Alternatively, in the Amended Summons, as quoted in par [14] above the Opponents assert, in the alternative, that the Share Sale Agreement was an arrangement collateral to one under which work was performed by reason of the matters there set out. Mr West QC submitted that the Share Sale Agreement was an “arrangement” that was “collateral” to, most relevantly, the Employment Agreement and, perhaps, the other contracts of employment.

41 Mr Douglas submitted that the word “collateral” in s105 should be confined to a “collateral contract” as determined in the law of contracts. The words “collateral contract” do not appear in s105. In any event, this submission would prefer form over substance which is not permissible in this context. (See Brown v Rezitis (1970) 122 CLR 157 at 164; Mitchforce at [180] per Handley JA.) Indeed the breadth of the definition of contract in s105 itself makes this clear, particularly the use on two occasions of the word “arrangement”. The words “collateral arrangement”, as with the words “related condition”, are intended to bear their natural and ordinary meaning, rather than any technical meaning.

42 Although it is not pleaded, the Opponents propounded a further jurisdictional basis in this Court. They submitted that there was a broader “arrangement”, of which the Share Sale Agreement was part, and which included other matters, notably the Employment Agreement. As noted above, this Court would not prohibit proceedings where a matter could be raised by amendment to assert that a different legal effect arises from facts that are common ground.

43 Mr West QC submitted that there was an intimate connection between the consideration of $19 million satisfied by the issue of shares and the continued employment of Mr Fish. Each was an essential element in an overall arrangement. In addition to the terms of the Share Sale Agreement, the Opponents relied on the oral evidence of the pre-contractual negotiations, to establish the existence of such an arrangement. This is set out in summary form in pars [9] and [10] above. This evidence, if accepted, would establish the proposition that Mr Fish’s continued employment was regarded as an important aspect of the business from the point of view of Solution 6 Holdings. However, the relevant representations appear to be fully reflected in the final documentation.

44 The overall arrangement, Mr West QC submitted, went beyond simply the sale of the business with an expectation that Mr Fish and other employees would work in the business under new management. He submitted that the Share Sale Agreement together with other arrangements relating to the employment of Mr Fish constituted a recognition that the engagement of Mr Fish was crucial to the value of the business being purchased and fundamental to the capacity of its new owners to exploit that. This objective extended, he submitted, to other key employees and, perhaps, to all employees. The significance of the employment of Mr Fish was manifest in the fact that the execution of the new employment contract by him was a condition precedent to completion of the Agreement.

45 The evidence of Mr Fish, tendered in this Court, does suggest that the prior negotiations could be said to constitute an arrangement with a number of component parts which included the Share Sale Agreement and the Employment Agreement.

46 Mr F Douglas QC submitted that the power of the court to declare void or to vary a contract, as defined, must be confined to that part of a contract, arrangement, related condition or collateral arrangement, whereby a person performs work in an industry. Although the High Court once proceeded on a contrary assumption, it was clearly just that. There is no authority to the contrary. (See Gosper v Sawyer (1985) 160 CLR 548 at 560.) Mr J West QC submitted that once there is in existence a contract, etc. and orders may be made, then such orders may be directed to any part of the contract or arrangement, irrespective of whether that part can be said to be a contract, etc., whereby work is performed in an industry.

Is the Application Premature?

47 Mr West QC submitted that the application to this Court was premature. This Court should not intervene as it could not be satisfied that the evidence to be adduced in the Commission would not establish one of the above bases for jurisdiction or, indeed, another basis. He submitted that the Commission was not a court of strict pleading and the Summons instituting the proceedings does not necessarily represent the final factual position.

48 Part 3 r 18A of the Industrial Relations Commission Rules states:

“18A(1) An application to the Commission to exercise the powers conferred on it by section 106 must be in Form 12A and must:

(a) specify in summary the matters of fact and law which form the basis of the application, but not the evidence by which those facts are to be proved; and

(b) contain sufficient information to allow the Commission to carry out its duty to conciliate under s109 by a succinct summary.”

49 In addition to repeating the terms of r18A(1), Form 12A requires the Summons to identify the orders sought.

50 The Amended Summons complies with these requirements. The Summons accordingly contains a “summary” of the facts “which form the basis of the application”. The Claimants, for purposes of these proceedings, accept that summary. That is sufficient for the Claimants to establish the factual foundation of the relief sought in this Court. The Opponents were given the opportunity, in accordance with this Court’s usual practice, to place further facts before this Court and, indeed, did so.

51 If in the light of all of the evidence before this Court, primarily the Amended Summons itself, it appears that that part challenged here is beyond the Commission’s jurisdiction, this Court may exercise its supervisory jurisdiction.

Is the Requisite Jurisdictional Fact Established?

52 As noted above, the Applicants in the Commission, the Opponents in this Court, rely on three alternative bases for bringing the Share Sale Agreement within s106. It is first submitted that the Agreement itself is a contract “whereby work is performed in an industry”. Alternatively, it is said the Share Sale Agreement is “collateral” to a contract, etc. whereby work is performed in an industry. Finally, it is submitted that there is a pre-existing broader arrangement, of which both the Share Sale Agreement and the Employment Agreement are part, and that this overall arrangement is a contract, within the meaning of s105, “whereby work is performed in any industry”.

53 In my opinion, with respect to each of the three approaches, the submission should be rejected. In each case the relationship between the contract, etc. and the performance of work in an industry is indirect or consequential, rather than direct. Further, the relief sought with respect to the Share Sale Agreement goes beyond the Commission’s power to declare void or vary the contract, etc.

54 In the course of his submissions Mr Douglas QC relied on my identification in Mitchforce at [13] of two elements which I derived from the judgment of Jacobs JA in VG Haulage at 88. That passage was:

“It seems to me that the legislature was concerned to empower the Industrial Tribunals … to examine contracts and arrangements which led directly to the employment of persons and the performance of work in any industry, not simply because the contract or arrangement in a commercial sense involves the provision of goods and services, with a consequent performance of work in an industry, but rather because the impugned agreement or arrangement itself directly envisages the employment of a person or persons in industry and has a recognizable impact upon the conditions of that employment, and, whether or not it envisages that a contracting party will perform the work, discloses a purpose that by the adoption of the arrangement the industrial objectives of the legislation will be more or less defeated.”

55 On this basis, I identified three elements as constituting circumstances, which his Honour described as a contract or arrangement “which led directly to the employment of persons and the performance of work in any industry”. These were:

“(i) The contract itself ‘directly envisages’ performance of work.

(ii) The contract has a ‘recognisable impact on the conditions of that employment’ and ‘work’.

56 I noted in Mitchforce at [14] that (iii) could no longer be maintained, but (i) and (ii) were consistent with the later decision in Stevenson v Barham. (See also Mitchforce at [194] per Handley JA.) Mr Douglas QC relied on these observations.

57 My discussion of these matters was not intended to put forward an alternative test to the test of a “direct” relationship between the contract and the performance of the work propounded in the joint judgment of Stevenson v Barham set out above. The terminology of VG Haulage is of use, however, in understanding what is meant by the word “directly”. Where it can properly be said that a contract, etc. both “directly envisages” the performance of work and has a “recognisable impact on the conditions of that work”, then the conclusion will readily be drawn that the contract, etc. “directly” leads to the performance of work in an industry. In VG Haulage Jacobs JA contrasted a situation of which that could be said, with a situation where there is a contract or arrangement that “involves the provision of goods and services, with a consequent performance of work in an industry”. Mere ‘consequential’ performance, his Honour suggested, is insufficient.

58 Although it is not an alternative test, I find it difficult to conceive of a contract, etc. which can be said to directly lead to the performance of work unless the contract, etc. both envisages the performance of work and has an impact upon the conditions of such performance. It may well be that these are minimum conditions for the conclusion of “directness” to be drawn.

59 In my opinion, the Share Sale Agreement is to be characterised, and characterised only, as a contract for the purchase and sale of a business. It contains provisions dealing with the continuation of existing employment relations and, in one case, for the creation of a new relationship equivalent to the pre-existing relationship, i.e. the transfer of Mr Fish as a senior executive from the operating company to the new holding company. However, it cannot, in my opinion, be said of any of the provisions of this Agreement upon which the Opponents rely, whether individually or for their combined effect, that they lead to the performance of work in an industry in a manner that is ‘direct’. It cannot be said that the Share Sale Agreement “directly envisages” the performance of work or has “recognisable impact on the conditions of” that performance (to use the VG Haulage test). Furthermore, it cannot be said that that performance is a purpose of the Share Sale Agreement. Nor can it be said that it provides for the performance of work under or pursuant to its terms (to use the two tests propounded in Production Spray Painting). Nothing in the Share Sale Agreement requires anyone to perform work (to use a formulation from Production Spray Painting and Majik Markets). It envisages the continuation of or, in one case, the creation of an employment relationship, but it leads to the performance of work only in an indirect or remote or consequential manner.

60 Clause 2.1(a) is a condition of completion. It states that completion will not occur unless Mr Fish has been released from employment with FishTech and Partners and has entered into an employment contract with Solution 6 Holdings. However, that clause does not lead to the performance of work. It may, unless waived by Solution 6 Holdings, lead to non-completion of the contract for the purchase and sale of shares. It does not lead in any direct sense to the performance of work in an industry. It is the Employment Agreement envisaged by cl 2.1(a) that is the agreement which leads directly to the performance of work in an industry by Mr Fish.

61 The further condition precedent in cl 2.1(c), expressed in terms of Solution 6 Holdings being satisfied that certain key employees have not resigned or indicated an intention not to continue employment with FishTech, is in no different position to cl 2.1(a). This is also a provision that can only be waived by Solution 6 Holdings. Its operative effect cannot be said to lead directly to work in an industry. It envisages the continuation of pre-existing employment arrangements and, in my opinion, does not even have an indirect effect that can be characterised in terms of ‘leading to a person working in an industry’.

62 The obligation in cl 14.1 on the Opponents to use their best endeavours to ensure that employees and contractors remain in the employ of, or contracted to, the company is in no different position. It represents the continuation of an existing state of affairs rather than in any sense ‘leading to performance of work in an industry’, let alone doing so ‘directly’.

63 Even if the further assurances clause (i.e. cl 15.9) can extend to the Employment Agreement as a “transaction”, with respect to which Mr Fish and Nisha Nominees are obliged to act, the relationship between that clause and the performance of work is indirect. It is mediated through the “transaction” being the Employment Agreement.

64 In my opinion the Share Sale Agreement is not, of itself, a contract within s106(1) of the Act.

65 As to the third way in which the case was put, the overall arrangement suggested in Mr Fish’s oral evidence cannot be said to lead directly to the performance of work in an industry. It only leads to the performance of work indirectly or as a consequential matter. This occurs through the medium of the particular contracts or arrangements, such as the Employment Agreement, in the case of Mr Fish, and other contracts in the case of other employees and contractors.

66 The “collateral arrangement” alternative is also, in my opinion, inapplicable. The s105 definition distinguishes between a “contract” and an “arrangement”. The Share Sale Agreement is an enforceable contract. It is not an “arrangement” and cannot, therefore, be a “collateral arrangement”.

67 It is also clear that the Share Sale Agreement, even if regarded as a “collateral arrangement”, does not lead, for the reasons already given, to the performance of work in an industry. Mr West QC submitted that the s106 power to void or vary a “collateral arrangement” can be exercised even though the relationship said to be an “arrangement” does not lead to the performance of work or, it appears, though it has no effect on the conditions of work or causes any other impingement on the work relationship.

68 A relevant line of authority in the Commission is directed to whether the words “whereby work is performed in any industry” qualify each of the preceding words or are confined to “contract or arrangement”. (See In re Becker and Harry M. Miller Attractions Pty Ltd (No 2) [1972] AR (NSW) 298 at 308; Gray v Rentokil Pty Ltd (unreported, Industrial Court of NSW, Bauer J, 2 April 1992) at 10-11; BNY Australia v James (1992) 40 IR 1 at 43; Bartolacci v Permanent Custodians Limited (1992) 44 IR 388 at 397-398; Bartolacci v Permanent Custodians Limited (No 2) (1992) 94 IR 122 at 125-126; Howitt v Retec Limited (1992) 45 IR 245 at 255; Harris v Hammon (1992) 53 IR 235 at 240-241; Grover v NSW Abalone Divers Co-operative Society Limited (1995) 60 IR 342 at 351; Klein v Adler (unreported, Industrial Relations Commission of NSW, Schmidt J, 21 November 1996) at 29ff; Carter v NSW Rugby League Limited (1997) 78 IR 368 at 390-391; Bell v Macquarie Bank Limited (No 4) (1999) 93 IR 191 at 206; Cash Converters Pty Ltd v Yildiz (1999) 94 IR 474 at 476; Euphoric Pty Ltd v Ryledar Pty Ltd (2002) 117 IR 1 at 15-21; Strathfield Group Limited v Hall (2002) 121 IR 158 at 168; AOS Group Australia Pty Ltd (in liq) v Arrogante [2004] NSW IRComm 80 at [14]-[29]

69 What these cases suggest is that s106 should be construed as if it read:

“The Commission may make an order declaring wholly or partly void, or varying, any contract or arrangement whereby a person performs work in any industry or any related condition or collateral arrangement if the Commission finds that the contract or arrangement or any related condition or collateral arrangement is an unfair contract or arrangement or an unfair related condition or collateral arrangement.”

70 In the two predecessor provisions of s106 – s88F of the Industrial Arbitration Act 1940 and s275 of the Industrial Relations Act 1991 – the references to “contract or arrangement or any (related) condition or collateral arrangement” were fully stated on both of the first two occasions that the word “contract” appears in s106(1), i.e. before the reference to “unfair”. Each section also contained in its operative provision what appears in s105 as the definition of unfair contract. The incorporation of these references in a separate definition section made the operative section easier to read. It was “a mechanical device to save repetition” (Mutual Acceptance Co Limited v Federal Commissioner of Taxation (1944) 69 CLR 389 at 398 per Rich J). There is no suggestion that any substantive change was intended. The construction issue now before the Court was present before the relevant words were transposed into a definition section.

71 The original concern appears to have been to ensure that all incidents of the employment arrangement were caught by the equivalent section to s106, e.g. that a superannuation policy was a “collateral arrangement”. (Gray v Rentokil Pty Ltd relied on by Hungerford J in Bartolacci v Permanent Custodians Limited.) I have no doubt that the entire remuneration package for a contract or arrangement “whereby work is performed in an industry” is within the Commission’s jurisdiction. This, however, is because of the link identified in Gosper v Sawyer at 561:

“The Commission has clear power … to avoid or vary a term of that contract which requires the employee to become a member of a pension scheme established under a trust …”

72 It is simply unnecessary to vary the trust of an existing superannuation scheme in order to vary, and to replace by another superannuation arrangement, the provision which requires membership of a particular scheme.

73 Once jurisdiction is established, I have no doubt that the Commission can void or vary any aspect of a contract or arrangement which is closely related to the performance of work. In the usual case all aspects of the remuneration package will be within the scope of the contract or arrangement “whereby work is performed in an industry”, even if different aspects are contained in different documents.

74 The principal theme in the line of authority to which I have referred above is the application of the presumption against surplusage. As the joint judgment put it in Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355 at 382: “a court construing a statutory provision must strive to give meaning to every word of the provision”.

75 There are, however, many occasions on which that cannot be done. (See, e.g. Brisbane City Council v Attorney General (Qld) (1908) 5 CLR 695 at 720; Hill v William Hill (Park Lane) Ltd [1949] AC 530 at 546-547.) Often “this presumption or rule of construction is of limited application”. (Chu Kheng Lim v Minister for Immigration (1992) 172 CLR 1 at 13.)

76 The definition of contract in s105 bears on its face a legislative concern to prevent evasion by subterfuge and legal tricks of the authority of the Commission to regulate the terms and conditions of work in an industry. That terminology chosen for such a purpose should overlap and prove superfluous, is not surprising.

77 It may be the case that a “relevant condition” or a “collateral arrangement” will rarely, if ever, be found to lead to work in an industry where the “contract or arrangement” to which the condition is “related” or the arrangement is “collateral” does not do so. However, the prospect that lawyers may find ways to ensure that a “contract” or “arrangement” does not do so by means, for example, of having multiple corporations involved in various aspects of a relationship, may have warranted an abundance of caution on the part of the draftsperson.

78 I cannot, however, accept the submission based on this line of authority that, if the Commission is not restricted to varying contracts which of themselves lead to the performance of work, s106 entitles it to vary or declare void any contract or arrangement related or collateral, however tenuously or indirectly, to a contract or arrangement which does so.

79 The conclusion of the Full Bench of the Commission that s106 has conferred on the Commission “a major commercial jurisdiction exercised in circumstances frequently having little to do with the industrial arbitration and similar litigation normally encountered by industrial tribunals” goes too far. (Rolles v Donald Scott Surgical Pty Ltd (unreported, Industrial Relations Commission of NSW, Fisher P, Cahill VP and Bauer J, 19 February 1998).)

80 This approach disengages s106 from the scope and purpose of the legislative scheme within which it is found. That is inconsistent with the contemporary approach to statutory interpretation. The power to void or vary is confined to aspects of a contract, as defined, which are closely related to the performance of work.

81 The identification of precisely what the Commission is empowered to void or vary must be determined in accordance with principles of statutory interpretation. In contemporary Australian jurisprudence, a purposive approach to interpretation is to be adopted, not a narrow literalism. That approach is expressed in a joint judgment of Brennan CJ, Dawson, Toohey and Gummow JJ in CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384. (See also the joint judgment of McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority at [69]), and the joint judgment of McHugh ACJ, Gummow and Hayne JJ in Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 78 ALJR 585 at [11].) The Courts no longer “make a fortress out of the dictionary” Cabell v Markham 148 F 2d 737 (1945) at 739 per Learned Hand J.

82 The CIC Insurance judgment (at 408) said:

the context be considered in the first instance

Instances of general words in a statute being so constrained by their context are numerous

Isherwood v Butler Pollnow Pty Ltd

83 Section 106 must be read and understood in an industrial context for the reasons I set out in Mitchforce at [6]-[17]. In my opinion, the power to declare void or vary a contract, etc. under s106(1) extends only to such aspects of it as closely relate to the performance of work in an industry. It does appear that litigants before the Commission have proceeded on the basis of a literal interpretation of the power in s106.

84 A significant part of the context in which s106 falls to be construed is the Act in which it appears and the functions of and composition of the Commission which is to exercise the power. The focus of attention is work. The overall context of an act will not always require an independent, complete and unambiguously expressed power to be read down. (See, e.g. K & S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309.) However, in the present case, unlike K & S Lake City Freighters, the limitation is expressed in the very section conferring the power.

85 The word “work”, of course, is found in s106(1) itself, in the phrase “whereby a person performs work in any industry”. This focus is consistent with the whole of the legislative scheme, notably the objects clause in s3 of the Act, and with other provisions in the Part of the Act under consideration:

· In exercising the power, the one matter to which the Commission is obliged to have regard is the effect on apprenticeship (s106(4)).

· The reference to ‘performance of work in an industry’ is repeated in the power to make further orders of a protective character in s107(1), (c) and (d).

· The persons who may apply for orders under s106 and s107 include industrial organisations (s108).

86 The definition of industry in s7 incorporates as part of the definition a reference to “work”. If that definition were to be read into s106(1) in a literal fashion there would be an element of circularity: “The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any trade, manufacture, business, project or occupation in which persons work …”

87 The very circularity emphasises the scope and purpose of the legislative scheme within which s106 is found. A purposive construction of the power to declare void or to vary would limit that power to aspects of the contract or arrangement, or related condition or collateral arrangement, which relate in some reasonably direct manner to the performance of work.

88 As Griffith CJ said in Nolan v Clifford (1904) 1 CLR 429 at 444:

“It is always necessary in dealing with any law that alters the common law, and especially where the common law rights of the liberty of the subject or relating to property are concerned, to consider what was the previous law, and what were the apparent reasons for the alterations made …”

89 The “apparent reasons” for the “alterations” made, by giving the Commission the power to rewrite contracts, were confined to matters relating to the performance of work.

90 I realise that the judgment of Mason J in K & S Lake City Freighters was a dissenting judgment. However, his Honour’s approach to statutory interpretation, particularly his emphasis (at 315) on the need to take context into account in the first instance and not only after detecting ambiguity, “especially in the case of general words”, is the origin of subsequent High Court authority culminating in the passage from CIC Insurance quoted above.

91 K & S Lake City Freighters concerned a section (s133) which prohibited contractual exclusion of liability for negligence. The issue was whether or not the section was confined to claims for personal injury or extended to contracts for carriage of goods. The approach of Mason J is particularly appropriate to a case, such as the present, where the limitation to ‘performance of work’ is found in the very power to be construed. His Honour (at 318) said:

“Notwithstanding the general terms in which it is expressed, s. 133 must therefore be considered in the context of a part of the Act which is devoted in its essential elements exclusively to the establishment of a compulsory insurance scheme to provide compensation for death and bodily injury. With due respect to those who think otherwise, that context demands that the section be read more narrowly than if it had stood alone so that it does not extend to include contracts relating to claims in respect of loss of property. After all, the object of a provision against contracting out is to secure to the class of persons intended to be protected the benefits which the statute seeks to make available. In view of the absence of any similar compulsory insurance requirements in relation to property damage, a natural reading of the section requires that it be confined to rights to damages in respect of death or bodily injury, these being the benefits which the statute is concerned to provide. It would be otherwise if any recognizable policy could be seen to be served by restricting contractual freedom in this area. But no such policy can be discerned.”

92 Of course, every statutory context must be considered separately as the indicators will differ from case to case. In my opinion, Mason J’s approach is applicable to s106 of the Act. The present context is one solely relating to the performance of work.

93 In my opinion, the scope and purpose of the legislative scheme requires the words conferring power - “void” and “vary” or to order the payment of money - be “constrained by their context”, to use the terminology of CIC Insurance quoted above. There are numerous instances of such a process, dating back at least to 1560 in Stradling v Morgan (1560) 1 Plowden 19 at 204; 75 ER 305 at 312. (See the cases referred to in R v Young (1999) 46 NSWLR 681 at [17]-[31].) The immediate context, confirmed by the entire legislative scheme, is one relating to “work in an industry”.

94 It is not appropriate, in the context of a legislative scheme such as Pt 9 Div 1, to take a narrow approach to the total package of benefits, conditions rights and obligations which relate to performance of work. Nevertheless, the provisions of the Share Sale Agreement cannot, in my opinion, be related to the performance of work at all, let alone closely.

· In Ballam, McHugh JA agreed and added at 133:

always of assistance to this Court

· In Boral Gas (NSW) Pty Ltd v Magill at 518, Mahoney JA said:

which would affect the availability of prerogative relief

which may affect the nature and extent of the relief

· A deferral of an application for prohibition should occur if it “would assist this Court in discharging its ultimate responsibility if evidence were taken in the tribunal below.” (R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League Inc (1979) 143 CLR 190 at 216 per Gibbs J.)

144 Reasoning of the above character is not applicable where, as is now the case with respect to the Commission, after a “decision” is made, prerogative relief is available only on the restricted basis of the Hickman principle.

145 Although this Court must still be slow to intervene before a superior court like the Commission has had an opportunity to determine its own jurisdiction, the principle of restraint can no longer operate as it did before s179 was enacted, at least with respect to matters that are not of an industrial character.

Exercise of the Discretion

146 There are a number of reasons why the discretion should be exercised in a case of this kind.

147 The policy of the law is to encourage the settlement of disputes. The policy of this Court has long been to ensure the early determination of commercial disputes, whether by negotiation, mediation or adjudication. In order to observe this policy the Supreme Court has long since adopted case management practices designed to identify at an early stage the true issues in dispute.

148 Alternative dispute resolution which, as s109 of the Act shows, is also a purpose of the Industrial Relations Act 1996, is likely to be less effective where there is uncertainty as to the applicable legal principles. Where, as with s106, there is a power to vary which on one view is unconfined by the scope and purpose of the legislation, there is no legal standard on the basis of which advice as to prospects can be given. Advice concerning the exercise of an unconfined discretion does not involve the clarity of a legal standard.

149 Advice on prospects about whether a contract will be found to be unfair on the broad basis permitted by the Act, and the nature and extent of variation likely to be ordered by the Commission, covers a much broader spectrum than the usual commercial dispute. The very breadth of the range of outcomes is such that legal advice as to prospects is likely to be similarly divergent. This tends to inhibit the prospect of compromise. If relief under s106 is not available, commercial parties should be told at an early time.

150 In commercial matters of this character, the economic welfare of the community requires early determination of the dispute. If there is a definite basis for resolving or narrowing the case, in a manner which advances commercial convenience, this Court should not refrain from exercising its jurisdiction unless there is a reason for doing so. I can see no such reason here.

151 The Commission is comprised of judges drawn in large measure from the specialist industrial bar. Few, if any, of the members of the Commission have substantial experience of commerce or of commercial law. Where, as here, relief is sought with respect to matters which do not relate to the performance of work, the Commission is not a “specialist tribunal” of the kind referred to in the authorities, whose expertise should be accepted by a court with a supervisory jurisdiction.

152 Furthermore, nothing has been placed before the Court which suggests that any fact finding is required to determine the jurisdictional issue. In accordance with the Rules of the Commission, set out above, the Summons contains a summary of the facts. For purposes of these proceedings, the Claimants accept the facts set out in the Summons. Those facts and the supporting documents which have been tendered, and the relevant background in the Opponent’s oral evidence, do not suggest any deficiency in the material before the Court.

153 The aspect of the proceedings challenged here would give rise to considerable expenditure on the part of the parties and require the Commission to devote its limited resources to their resolution. Maintaining the complex issues that arise on foot would prevent the speedy resolution, including by way of settlement, of the issues that are within jurisdiction.

154 Furthermore, it has always been accepted that where the absence or excess of jurisdiction is quite clear, a court with a supervisory jurisdiction will not exercise its discretion by refusing to intervene. The test has been expressed in varied, but equivalent, terminology: “patent” per Brennan J in Ross-Jones at 218; “plainly” per Mason J in Pilkington A.C.I. at 127; “clear” per Mahoney JA in Boral Gas at 519 and per Murphy J in R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League at 238.

155 The position appears to be as set out by Brennan J in R v Gray; Ex parte Marsh at 381-382:

Farquharson v. Morgan

R v Ross-Jones

Master Retailers’ Association of NSW v Shop Assistants Union of NSW

Yirrell v Yirrell

156 The facts necessary to determine jurisdiction may be “agreed” or “indisputable”. (See Ex parte Western Australian National Football League at 206.9 and 207.7 per Barwick CJ.) The case may be one where “the jurisdictional facts are not in dispute”. (Ballam at 133 per McHugh JA.) That is the case here.

157 A court exercising a supervisory jurisdiction will intervene where there is some reason for thinking that the tribunal will exceed the authority conferred upon it. (See R v Australian Stevedoring Industry Board at 118-119 quoted in par [141] above. See also R v Gray; Ex parte Marsh at 375 per Mason J.) It is not necessary to rely on that approach in the present case.

158 For the reasons set out above, in my opinion, the defect in the jurisdiction of the Commission is patent, plain or clear in the sense referred to in the above authorities. It appears on the face of the Amended Summons and evidence cannot cure it, to apply the formulation in R v Gray; Ex parte Marsh. The Claimants are persons aggrieved and orders should be made “almost as of right” to use the formulation of Gibbs CJ in R v Ross-Jones approved, as I have noted above, in Re Refugee Tribunal; Ex parte Aala. An order to the effect of prohibition should issue.

159 Order 1 in the Summons filed in this Court should be made. The orders I propose are:

1 The First Opponent is prohibited from taking any steps to further exercise, or purport to exercise, its power under s106 Industrial Relations Act 1996 in Industrial Relations Commission of NSW proceedings No 1168 of 2002 with respect to the Share Sale Agreement between the First Claimant, Second Opponent, Third Opponent and FishTech and Partners Pty Ltd as described in the Amended Summons filed in the Industrial Relations Commission proceedings on 14 February 2003.

160 MASON P: I agree with Spigelman CJ and the supplementary reasons of Handley JA. I share the reservations expressed by Handley JA in the penultimate paragraph of his reasons.

161 HANDLEY JA: In this matter I have had the benefit of reading the reasons for judgment of the Chief Justice in draft. I agree substantially with his Honour’s reasons and I agree with the orders he has proposed but will add some supplementary reasons of my own.

162 Mr Douglas QC did not challenge the jurisdiction of the Commission to uphold the opponents’ claim that the Share Sale Agreement was unfair because it “permitted” Solution 6 Holdings to commit a breach of contract. The Commission held by majority in Reich v Client Services Professionals of Australia Ltd (2000) 49 NSWLR 551 that a contract can become unfair because of conduct in breach of its terms. The Chief Justice has again left open the validity of this proposition. I wish to express grave reservations about it.

163 I raised this matter with Mr West QC towards the end of his argument and he did not attempt to defend the proposition. The common law “permits” every party to every contract to commit a breach of its terms. Such conduct although unlawful (see Rookes v Barnard [1964] AC 1129, 1201, 1206-7) in one sense is ”permitted” because the ordinary remedy for breach of an executory contract is an award of damages, not specific enforcement. The common law also “permits” a party to a contract that has otherwise been fully performed to breach its terms by failing to pay the contract debt on time. Even where equity would directly enforce a contract by specific performance or injunction breaches will normally have occurred and those contracts too will have “permitted” those breaches.

164 Accordingly the principle that a contract can become unfair because of a breach produces the remarkable result that all contracts are unfair because all contracts permit a breach. Despite the general principle that the question of unfairness is a matter for the Commission and not a Court with purely supervisory jurisdiction, it is not at all clear that the Commission has jurisdiction within the Hickman principles to find that a contract which it has held to be otherwise fair is nevertheless unfair because it has been breached. The acts or omissions which constitute a breach of contract are of course unfair but that does not make the contract unfair. It may be a perfectly fair contract.

165 Until the definition of contract in s 105 is read into s 106(1) it is not immediately clear that the words “whereby a person performs work in any industry” qualify each limb of the definition. When the definition is read in the section reads:

“The Commission may make an order declaring wholly or partly void, or varying, any contract [or arrangement or any related condition or collateral arrangement] whereby a person performs work in any industry …” (brackets supplied)

166 The extended text makes it clear that the words “whereby a person performs work in any industry” qualify each limb in the definition of contract and not merely the first two. Where there is a contract or arrangement whereby a person performs work in any industry a related condition or collateral arrangement which is not itself one whereby work is performed in an industry is not within the jurisdiction conferred by the section.

167 Section 106, when extended by the definition, is relevantly in the same terms as its predecessors and the same construction applies. The present point was noticed in Gosper v Sawyer (1985) 160 CLR 548, 560 by Gibbs CJ, Wilson and Dawson JJ who said:

“It may be assumed, without deciding, that the phrase ‘whereby a person performs work in any industry’ governs ‘contract or arrangement’ and not ‘collateral arrangement relating thereto’ and that the power extends to avoid or vary, not only the contract or arrangement of employment, but also any collateral arrangement relating thereto.”

168 This is not even a dictum on the point, as the Justices made clear, because they were emphasising that when every possible assumption was made in favour of the applicant in the Commission it still lacked jurisdiction.

169 The construction assumed in Gosper v Sawyer would require either the insertion of brackets around the words “or any related condition or collateral arrangement” or the transposition of the words “whereby a person performs work in any industry” so that they followed “contract or arrangement” and preceded the words “or any related condition or collateral arrangement”. Such a result may be achieved by surgery but not by construction.

170 The Chief Justice has concluded that a narrow construction of s 106(1) is required to accommodate its context in the Act and I agree. In my judgment this view is supported by the wider context. This includes the Contracts Review Act 1980 which confers powers on the ordinary Courts to vary contracts or declare them void and grant consequential relief. It also includes the Fair Trading Act 1987 which in ss 42, 43, 44, 45, 49, 50, 54 and 55 proscribes unfair and unconscionable conduct in trade or commerce. Such conduct commonly brings about the formation of contracts and if so the Supreme Court under s 72(5) can vary or avoid them and grant consequential relief.

171 The powers conferred on the ordinary Courts by these Acts to vary or avoid contracts are subject to their own restrictions and limitations, and on any view overlap s 106. Nevertheless these Acts apply generally to all types of contracts, whereas s 106(1) only applies to those whereby a person performs work in any industry. In this wider context s 106(1) can be seen to be a special and not a general power. This supports the narrower construction adopted by the Chief Justice which leaves the Share Sale Agreement outside the jurisdiction conferred by s 106(1).

172 This construction does not elevate form over substance. Nothing can turn on whether the overall arrangement is incorporated in one or more contracts or documents or is effected by one or more informal transactions. Even under the general law the existence of separate documents executed at or about the same time can rarely, if ever, affect the legal relationship between the parties. In Shaw v Jeffrey (1860) 13 Moo PCC 432, 456-7 [15 ER 162, 171] Knight Bruce LJ said:

“When the same parties execute contemporaneously several instruments relating to different parts of the same transaction, all must be considered together; all must be examined in order to understand each … and … the governing intention of the parties is … collected from a consideration of the language of all the instruments, and effect given to it.”

173 This passage was quoted by Isaacs J in Toohey v Gunther (1928) 41 CLR 181, 196 who continued:

“Applying that principle, no doubt can exist that the three documents are integral parts of the same wide transaction, intended to regulate as a totality the relations and rights and obligations of the parties … and therefore incapable of being treated as independent of each other.”

174 There is no need to invoke these principles in cases under s 106(1), which as Barwick CJ said in Brown v Rezitis (1970) 127 CLR 157, 164 strikes at subterfuges and enables the Commission to uncover the real transaction. This means the real transaction whereby work was performed in an industry. However as the Chief Justice has demonstrated the real transaction whereby Mr Fish performed work in an industry was the employment contract and not the Share Sale Agreement.

175 A decision that the Commission has no jurisdiction to review the Share Sale Agreement is not inconsistent with the decisions of the Commission and the superior courts dealing with composite transactions. In appropriate cases a share farming agreement (Stevenson v Barham (1977) 136 CLR 190) a lease of land (Mitchforce Pty Ltd v Industrial Relations Commission (2003) 57 NSWLR 212, 226, 247) or a licence to occupy land (Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169; Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443) may be a contract whereby a person performs work in an industry so that all its terms are susceptible to avoidance or variation by the Commission.

176 Thus in Stevenson v Barham the right to occupy the land for share farming purposes, and the remuneration of the share farmer for his work by a share of the profits, were inseparable parts of one transaction. In Caltex Oil (Australia) Pty Ltd v Feenan the licence to occupy the service station and the licence fees and prices payable by the licensee for products supplied by the company were also inseparable parts of one transaction. The remuneration of the licensee for his work could only be determined by considering all his rights and obligations under the overall arrangement. The Commission has jurisdiction in such a case whether the licence agreement and the fuel supply contract are in separate documents or not.

177 The point is illustrated by the decision of this Court in Ex parte V G Haulage Services Pty Ltd Re Industrial Commission [1972] 2 NSWLR 81. The overall contract or arrangement whereby a person performed work in an industry comprised the sale of a truck on terms over five years, a work agreement with the vendor under which the purchaser paid a premium of $2500 to obtain haulage and freight contracts over five years, and an agreement for the allotment by the vendor to the purchaser of one thousand preference shares of £1 each. This Court held that the whole contract or arrangement was within the jurisdiction of the Commission under s 88F and the decision has never been doubted. The Commission’s jurisdiction in sale of truck in work cases was frequently exercised before and after that decision. See eg Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371.

178 The Share Sale Agreement was no sense a contract whereby a person performed work in an industry. If Mr Fish had died between contract and completion Solution 6 Holdings could have waived the condition precedent in cl 2.1(a) and enforced completion although Mr Fish never worked and never could work for it or Solution 6. The seller was not his existing employer and the buyer did not become his new employer. The Share Sale Agreement was relevantly indistinguishable from the contract for the sale of the business held to be outside the Commission’s jurisdiction in Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644. In that case persons associated with the vendor did not work for the purchaser after completion and the Court left open the question of jurisdiction in such a case. Having had the benefit of the further argument in this case it is now clear to me that jurisdiction would not be attracted in such a case and there is no relevant distinction between that case and the present.

179 If the Commission found that this employment contract was not itself unfair it would be remarkable if it had jurisdiction under s 106 to vary a contract between two corporations for the sale of shares in another corporation on the ground that it was unfair. Such a result would be no less remarkable even if the employment contract was unfair because the appropriate relief would be limited to the avoidance or variation of that contract and appropriate consequential orders.

180 The shares subject to the Share Sale Agreement were not used by Mr Fish in or in connection with his work. They were not analogous to the farm, the hotel, the service stations or the trucks in the transactions considered in the leading cases.

181 The fairness or unfairness of the Share Sale Agreement would not have been affected even though Mr Fish worked for Solution 6 on generous terms for the rest of his normal working life, nor would it have been affected if he only worked for a short time before he died or became disabled. Equally the fairness or unfairness of his employment contract would not wax and wane with the market price of the shares.

182 I agree with the Chief Justice that s 179 has rendered inapplicable the line of authority in this Court under the earlier legislation which recognised a discretion to refuse prerogative relief until the Full Bench of the Commission had determined any internal appeal. When this line of authority was being developed s 84(1) of the 1940 Act and s 301 of the 1991 Act did not limit the jurisdiction of this Court to review for jurisdictional error in s 88F type cases. This Court could decline to entertain pre-emptive proceedings without affecting its jurisdiction or the rights of the parties. The only effect of s 84(1) of the 1940 Act in s 88F cases was to take away this Court’s jurisdiction to grant certiorari for non-jurisdictional error of law on the face of the record: Houssein v Under Secretary Department of Industrial Relations and Technology (1982) 148 CLR 88.

183 The enactment of the expanded privative provision in s 179 removed the foundation on which this line of authority had developed. As the Chief Justice has demonstrated the section confers extensive protection against jurisdictional challenge after the Commission has made a decision but no protection against pre-emptive jurisdictional review. The section does not enlarge the jurisdiction of the Commission to make a decision under s 106. The section has and should have no effect within the Commission itself. In those circumstances The Queen v Australian Stevedoring Industry Board Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100, 118-9 establishes that it is the duty of this Court, on a timely application, to restrain action by the Commission in excess of its jurisdiction before it has had an opportunity to make a decision.

184 In paras 134 and 135 of his reasons the Chief Justice mentions the possibility that s 69 of the Supreme Court Act has altered the substantive law governing judicial review that was exercised before the Act through the prerogative writs. The point was not argued. I see no reason to depart from the view, adopted by this Court in Dickinson v Perrignon [1973] 1 NSWLR 72, 79, 82-3 shortly after the Act came into force, that s 69 had not altered the substantive law but in the words of Street CJ in Eq at 82 effected “a minor procedural change”. This view has not hitherto been questioned.

185 The orders proposed by the Chief Justice should be made.

**********

Last Modified: 07/26/2004

Actions

Download as PDF Download as Word Document

Citations

Solution 6 Holdings Ltd v Industrial Relations Commission of New South Wales [2004] NSWCA 200

Most Recent Citation

Pages Hire Centre (NSW) Pty Ltd and Boros v Department of Premier and Cabinet [2014] SADC 3

Cases Citing This Decision

269

Konstantinidis v Council of the Law Society of New South Wales [2018] NSWCA 59

Dial a Dump Industries Pty Ltd v Roads and Maritime Services [2017] NSWCA 73

Torbey Investments Corporated Pty Ltd v Ferrara [2017] NSWCA 9

Cases Cited

54

Statutory Material Cited

11

Unitedglobalcom, Inc. and Ors. v The Industrial Relations Commission of NSW in Court Session [2005] NSWCA 131

Mitchforce Pty Ltd v Industrial Relations Commission of NSW [2003] NSWCA 151

Commissioner of Corrective Services v Government and Related Employees Appeal Tribunal (No 2) [2004] NSWCA 337

CITATION:	Solution 6 Holdings Limited & Ors v Industrial Relations Commission of NSW & Ors [2004] NSWCA 200
HEARING DATE(S):	22/04/04
JUDGMENT DATE:	21 July 2004
JUDGMENT OF:	Spigelman CJ at 1; Mason P at 160; Handley JA at 161
DECISION:	Order 1 sought by Claimant made. Second and Third Opponents to pay Claimants' costs.
CATCHWORDS:	INDUSTRIAL LAW - Industrial Relations Commission - jurisdiction - unfair contract - share sale agreement - not contract "whereby person performs work in any industry" - extension of Commission's jurisdiction over non-industrial contracts - industrial context of legislation - Industrial Relations Act 1996 ss 105, 106, 179 - limitation on Commission power to void or vary unfair contracts under s 106 - ADMINISTRATIVE LAW - privative clause - industrial relations legislation - where only interlocutory procedural decisions so far made by Commission - whether any decision or purported decision made by Commission - meaning of "decision" - no operative step taken - privative clause in s 179 inapplicable - principle of restraint - exercise of discretion to order prohibition where patent defect in Commission jurisdiction
LEGISLATION CITED:	Australian Constitution s 75(v) Contracts Review Act 1980 Fair Trading Act 1987 ss 42, 43, 44, 45, 49, 50, 54, 55, 72 Industrial Arbitration Act 1901 s 32 Industrial Arbitration Act 1912 s 58 Industrial Arbitration Act 1940 ss 84, 88F Industrial Disputes Act 1908 s 52 Industrial Relations Act 1991 ss 275, 301 Industrial Relations Act 1996 ss 7, 105, 106, 107, 108, 109, 152, 171, 175, 177, 179, 187, 189, 190, 190A, 191, 192, 193, 194, 195, 197, 197A Industrial Relations Commission Rules 1996 Pt 3 r 18A Supreme Court Act 1970 ss 48, 69
CASES CITED:	AOS Group Australia Pty Ltd (in liq) v Arrogante [2004] NSW IRComm 80 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Ballam v Higgins (1986) 17 IR 131 Bank of New South Wales v United Bank Officers' Association and the Court of Industrial Arbitration (1921) 21 SR(NSW) 593 Bartolacci v Permanent Custodians Limited (1992) 44 IR 388 Bartolacci v Permanent Custodians Limited (No 2) (1992) 94 IR 122 Baxter v New South Wales Clickers' Association (1909) 10 CLR 114 Bell v Macquarie Bank Limited (No 4) (1999) 93 IR 191 Belmore Property Pty Ltd v Allen (1950) 80 CLR 191 Black-Clawson International Limited v Papierwerke Waldhof-Aschaffenburg AG [1975] AC 591 BNY Australia v James (1992) 40 IR 1 Boral Gas (NSW) Pty Ltd v Magill (1993) 32 NSWLR 501 Brisbane City Council v Attorney General (Qld) (1908) 5 CLR 695 Bromley v Housing Commission of New South Wales (1985) 3 NSWLR 407 Brown v Rezitis (1970) 122 CLR 157 Byrne v Australian Airlines Limited (1995) 185 CLR 410 Cabell v Markham 148 F 2d 737 (1945) Caltex Oil (Australia) Pty Ltd v Feenan [1980] 1 NSWLR 724 Caltex Oil (Australia) Pty Ltd v Feenan [1981] 1 NSWLR 169 Carter v NSW Rugby League Limited (1997) 78 IR 368 Cash Converters Pty Ltd v Yildiz (1999) 94 IR 474 Cepus v Industrial Court of New South Wales (1995) 60 IR 113 Chu Kheng Lim v Minister for Immigration (1992) 172 CLR 1 CIC Insurance Limited v Bankstown Football Club Limited (1995) 187 CLR 384 Clancy v Butchers' Shop Employés Union (1904) 1 CLR 181 Darling Casino Limited v New South Wales Casino Control Authority (1997) 191 CLR 602 Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 Dickinson v Perrignon [1973] 1 NSWLR 72 Director General of Social Services v Chaney (1980) 47 FLR 80 Dossett v TKJ Nominees Pty Ltd (2004) 78 ALJR 161 Euphoric Pty Ltd v Ryledar Pty Ltd (2002) 117 IR 1 Ex parte The Caterers and Restaurant Keepers' Association (1903) 3 SR (NSW) 19 Ex parte VG Haulage Services Pty Limited; Re Industrial Commission of New South Wales [1972] 2 NSWLR 81 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Gosper v Sawyer (1985) 160 CLR 548 Gray v Rentokil Pty Ltd (unreported, Industrial Court of NSW, Bauer J, 2 April 1992) Grover v NSW Abalone Divers Co-operative Society Limited (1995) 60 IR 342 Harris v Hammon (1992) 53 IR 235 Hill v William Hill (Park Lane) Ltd [1949] AC 530 Houssein v Under Secretary of Department of Industrial Relations and Technology (NSW) (1988) 148 CLR 88 Howitt v Retec Limited (1992) 45 IR 245 In re Becker and Harry M. Miller Attractions Pty Ltd (No 2) [1972] AR (NSW) 298 K & S Lake City Freighters Pty Ltd v Gordon & Gotch Limited (1985) 157 CLR 309 Klein v Adler (unreported, Industrial Relations Commission of NSW, Schmidt J, 21 November 1996) Majik Markets Pty Ltd v Brake and Service Centre Drummoyne Pty Ltd (1992) 28 NSWLR 443 Maltais v Industrial Commission (NSW) (1986) 14 IR 367 Master Retailers' Association of NSW v Shop Assistants Union of NSW (1905) 2 CLR 94 Matadeen v Pointu [1999] 1 AC 98 Metropolitan Water Sewerage and Drainage Board v Histon [1982] 2 NSWLR 720 Metropolitan Water Sewerage and Drainage Board v Judges of the Industrial Commission of New South Wales [1981] AR 305 Mitchforce Pty Ltd v Industrial Relations Commission of NSW (2003) 57 NSWLR 212 Mitchforce Pty Ltd v Starkey (No 2) [2003] NSWIR Comm 458 Mutual Acceptance Co Limited v Federal Commissioner of Taxation (1944) 69 CLR 389 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 78 ALJR 585 Nolan v Clifford (1904) 1 CLR 429 Production Spray Painting & Panel Beating Pty Ltd v Newnham (1991) 27 NSWLR 644 Project Blue Sky Inc v Australian Broadcasting Authority (1988) 194 CLR 355 Public Service Association (SA) v Federated Clerks' Union (1991) 173 CLR 132 R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 R v Federal Court of Australia; Ex parte Pilkington A.C.I. (Operations) Pty Ltd (1978) 142 CLR 113 R v Gray; Ex parte Marsh (1985) 157 CLR 351 R v Hickman; Ex parte Fox (1945) 70 CLR 598 R v Judges of the Federal Court of Australia; Ex parte Western Australian National Football League Inc (1979) 143 CLR 190 R v PLV (2001) 51 NSWLR 736 R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 R v Young (1999) 46 NSWLR 681 Re Bolton; Ex parte Beane (1987) 162 CLR 514 Re Grimshaw; Ex parte Australian Telephone and Phonogram Officers' Association (1986) 60 ALJR 588 Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620 Re Refugee Tribunal; Ex parte Aala (2000) 204 CLR 82 Reich v Client Server Professionals of Australia Pty Ltd (2000) 49 NSWLR 551 Resarta Pty Ltd v Finemore (2002) 55 NSWLR 320 Rolles v Donald Scott Surgical Pty Ltd (unreported, Industrial Relations Commission of NSW, Fisher P, Cahill VP and Bauer J, 19 February 1998) Rookes v Barnard [1964] AC 1129 Rothmans Distribution Services Limited v Industrial Court of New South Wales (1994) 53 IR 157 Shaw v Jeffrey (1860) 13 Moo PCC 432; 15 ER 162 State v Zuma (1995) 4 BCLR 401 Stevenson v Barham (1977) 136 CLR 190 Stock v Frank Jones (Tipton) Limited [1978] 1 WLR 231 Stradling v Morgan (1560) 1 Plowden 19 Strathfield Group Limited v Hall (2002) 121 IR 158 Svecova v Industrial Commission of New South Wales (1991) 39 IR 328 Toohey v Gunther (1928) 41 CLR 181 Ultra Tune (Aust) Pty Ltd v Swann (1983) 8 IR 122 Walker v Industrial Court of New South Wales (1994) 53 IR 121 Wilson Parking (NSW) Pty Ltd v Industrial Commission of New South Wales [1979] 1 NSWLR 396 Yirrell v Yirrell (1939) 62 CLR 287
PARTIES :	Solution 6 Holdings Limited (First Claimant) Solution 6 Pty Ltd (Second Claimant) Neville Buch (Third Claimant) Neil Gamble (Fourth Claimant) Industrial Relations Commission of NSW (First Opponent) Nicholas Terrence Fish (Second Opponent) Nisha Nominees Pty Ltd (Third Opponent)
FILE NUMBER(S):	CA 40118/04
COUNSEL:	F M Douglas QC / B J A Shields (Claimants) J West QC / S Burchett (Second & Third Opponents) M Sexton SC / N Sharp (Attorney General)
SOLICITORS:	Deacons (Claimants) Crown Solicitor's Office (First Opponent) Clayton Utz (Second & Third Opponents)

LOWER COURTJURISDICTION:	Industrial Relations Commission of NSW
LOWER COURT FILE NUMBER(S):	1168/02
LOWER COURT JUDICIAL OFFICER :	N/A